Rising fuel costs and prohibitively expensive electric vehicles are making compressed natural gas (CNG) "a welcome relief and alternate fuel” for mobility for Indian consumers, according to a report by NRI (Nomura Research Institute) Consulting & Solutions.
CNG vehicle sales continued to grow in FY22, rising by 55 per cent to 2,65,383 units in FY22 compared to 1,71,288 units in FY21, as per NRI’s report titled 'Path to clean mobility: Increasing penetration of NGVs in India’.
In the last five years, the penetration of CNG vehicles has also increased, and its parc has grown at a CAGR of 5.3 per cent to 37.97 lakh units as of March 2022 from 30.90 lakh units in March 2018, the report said.
"With increased differential TCO (total cost of ownership) benefits compared to other fuels, CNG is gaining more prominence among consumer preference post-BS-VI. The technology is now well established in India with major OEMs concentrating to bring in a range of cost-efficient and fuel-efficient CNG variants,” NRI said in a statement.
The report pointed out that favourable factors, such as improvement in CNG fuelling infrastructure and supporting regulatory environment, are helping the growth of CNG vehicles.
"With fuel prices soaring and electric vehicles becoming prohibitively expensive for most Indians, vehicles that run on compressed natural gas could be considered as a welcome relief and an alternative for mobility,” NRI said.
The expansion of the CGD (city gas distribution) network and an increasing number of CNG stations is expected to encourage the proliferation of NGVs (natural gas vehicles), it added.
"The immense volume and favourable conditions of the Indian automobile market give an opportunity to promote widespread adoption of NGVs in India,” NRI Consulting & Solutions Senior Partner & Group Head Ashim Sharma said.
However, he pointed out that "higher gas prices will exacerbate the CGD industries’ already unfavourable economics, limiting network expansion and negatively impacting consumer experience. The government, industry and CGD companies must all work together for India’s NGV market to thrive in the future."
According to the report, bio-CNG provides an effective solution to environmental issues like stubble burning.
However, the uncertainty of biomass availability poses a challenge.Yet, India’s bio-CNG generation potential, once fully realised, can meet the current natural gas demand of the country and can power 54 lakh additional vehicles, it added.